Chipotle Seeks New Model for Quality Fast Food

June 16, 2009

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"One hundred percent of the chickens that we serve are served vegetarian diet," he said. "And not given antibiotics, and most of our beef now comes from the naturally raised protocol with no hormones and antibiotic-free."

Chipotle buys from a few thousand farms like Salatin's around the country. Ells said he always knew he wanted Chipotle to be different.

"When I started Chipotle 16 years ago, I wanted to show that just because we serve food quickly and conveniently doesn't mean we have to be a typical fast-food experience," he said. "And so we cooked fresh ingredients, in front of the customer, in an open kitchen. There was nothing to hide, there was total transparency."

Ells is actually a classically trained chef. After graduating from cooking school, he opened his first Chipotle, a burrito shop, in Denver in 1993. It was supposed to be a stepping stone to a "real" restaurant.

"I was this aspiring chef, but I needed a little cash cow, I needed something that could fund my restaurant," Ells said. "So I started Chipotle."

"You know, I don't really get hung up on titles," he said. "I mean, one thing is for sure, Chipotle is very quick and very convenient. But I think we have elevated traditional fast food."

For all the talk about green pastures and animal comfort, the financial engine behind Chipotle was a corporation not always associated with nature's way: McDonald's. The company was the major investor in Chipotle until 2006.

"It was not a strange marriage," Ells said. "I mean, initially I thought it didn't make much sense, my early investors had suggested that I go to McDonald's, and I sent them a business plan and got to meet a lot of the folks over there and they liked what we were doing and so, for a seven-year period, they funded the growth. But they let us run the business, they were primarily a financial thriver behind the business.

"I think that both of us wanted to go our own way, you know, I think that McDonald's focused on their hamburger business years ago, and sort of getting rid of all their partner brands was a good thing for them," he said.

Chipotle's focus on its food sources is hardly cost-free.

"Chipotle has higher food costs than our competitors," Ells said. "A little bit higher. But we have a business model that allows us to invest in higher-quality food, and it's great because obviously, this higher-quality food tastes better, which brings people back and it forms a deep bond with the customer."

Salatin credited Ells for his commitment to smaller farms.

Chipotle: Will Customers Pay More?

"Any person that didn't have that much passion as Steve did, would've just quit," Salatin said. "But they continued to hold our hand into an arena that we weren't used to, to ensure that we could walk through that door."

What about the customer? Will they pay more for locally farmed, free-range, antibiotic- and hormone-free meat?

"Well, I think they will appreciate it more," Ells said. "Again, this is a journey. It's not like you can flip a switch and have 100 percent, you know, free-ranging beef and chicken and pork on the menu at every restaurant in the U.S. It doesn't happen that way.